Coronavirus deals US job losses of 20.5m, historic unemployment rate in April

Washington

THE US economy lost a staggering 20.5 million jobs in April, the steepest plunge in payrolls since the Great Depression and the starkest sign yet of how the novel coronavirus pandemic is battering the world's biggest economy.

The Labor Department's closely watched monthly employment report on Friday also showed the unemployment rate surging to 14.7 per cent last month, shattering the post-World War II record of 10.8 per cent touched in November 1982.

The bleak numbers strengthen analysts' expectations of a slow recovery from the recession caused by the pandemic, adding to a pile of dismal data on consumer spending, business investment, trade, productivity and the housing market.

The report underscores the devastation unleashed by lockdowns imposed by states and local governments in mid-March to slow the spread of Covid-19, the respiratory illness caused by the virus.

But there was optimism in the US markets as investors felt the job losses in April were less than expected. Economists polled by Reuters had forecast nonfarm payrolls diving by 22 million. An easing in US-China friction also added to the optimism. The Dow rose 231.93 points, or 0.97 per cent to 24,107.82. The S&P 500 rose by 27.64 points at 2,908.83, while the Nasdaq Composite gained 77.23 points at the opening bell.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

President Donald Trump said he isn't surprised about the massive job losses and that he shouldn't be blamed for it. "It's fully expected. There's no surprise," he said on Fox & Friends, where he was being interviewed as the report was released. "Well, even the Democrats aren't blaming me for that, but what I can do is I'll bring it back."

Mr Trump expressed confidence that employment numbers could snap back quickly, given the nature of the shutdown. "We artificially closed it. Those jobs will all be back, and they'll be back very soon and next year we're going to have a phenomenal year."

Erica Groshen, a former commissioner of the Labor Department's Bureau of Labor Statistics and now a senior extension faculty member at the Cornell University School of Industrial and Labor Relations, said: "Our economy is on life support now. We will be testing the waters in the next few months to see if it can emerge safely from our policy-induced coma."

Data for March was revised to show 870,000 jobs lost instead of 701,000 as previously reported. A record streak of job growth dating to October 2010 ended in March. The unemployment was forecast rising to 16 per cent from 4.4 per cent in April.

Though millions of Americans continue to file claims for unemployment benefits, April could mark the trough in job losses. More small businesses are accessing their portion of an almost US$3 trillion fiscal package, which made provisions for them to get loans that could be partially forgiven if they were used for employee salaries.

The Federal Reserve has also thrown businesses credit lifelines and many states are also partially reopening. Still, economists do not expected a quick rebound in the labour market.

Economists say the economy entered recession in late March, when nearly the whole country went into Covid-19 lockdowns. REUTERS